What gives value to fiat money?
A couple of weeks ago I was talking with a friend who has a small business selling groceries, in that conversation he told me that he was forced to accept several forms of payment such as Amazon Gift Cards or BTC because many of his customers charged for their work in that form of payment and as they are a significant amount of customers could not say no to those means of payment, but here another question.
What do you do with gift cards and the BTC?
What is done in Venezuela with those forms of payment is easy to answer, you exchange them for $ in cash that you then use to pay the suppliers. With these new forms of payment the number of sales has increased and the truth is that you are very happy to accept these means of payment.
Since we are friends, we talk about various things related to business and it was in one of those conversations that I asked myself what makes a currency valuable.
After thinking for a moment I answered that the gold standard makes a coin valuable for people and he answered that it is not true, because if that were true the $ would not be worth anything and the country that has more gold would be the one that reigns in the world, but we see that it is not so but $ is the one that reigns then he asks me another question.
what gives value to gold?
I answer that it is a scarce material in the world and he answers that this is not true because there are cheaper and scarcer metals. On the other hand, it is logical that the market gives the title of scarcity to a value that is "many people wanting that value", but in the reality of gold we see that this is not true either, since it is not possible to explain who consumes so much gold in the world and even more if we take into account how big the mining industry is, I personally ask myself in a logical way, who needs and consumes so much gold? .....
After a while, we realized that the value of coins and the value of things is given by the trust in their acceptance by people as a means of payment. This trust in their acceptance is what gives things their value in reality.
Conclusion
After World War II, the United States created a financial system that allowed most countries to exchange goods and services using their currency, the $, which means that if you go to any country in the world, they will most likely accept $ and give change. This makes the dollar a world currency for the exchange of goods and services. Now to finish I ask you if this theory is not as crazy for you as it is for me, I remind you that a few years ago a currency came out of nowhere into the market that revolutionized things. This currency had the ease and advantage that it did not need a financial system to transfer value from one person to another. These characteristics gave it global potential from birth. Our beloved BTC that went from being useless to being the most expensive coin in the world today.
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